All Government Spending Not Created Equal

Under the title Tax. Spend. Create Great Jobs, John E. Schwarz argues in The Washington Post that government is responsible for much of the technology that has driven our economy for the past 40 years. About that, he may be correct. But his assertion that this validates the Democratic vision of an activist government may fall apart under closer inspection.

Consider the kinds of industries usually associated with the modern economy: jet aviation, semiconductors, computers, the Internet, global positioning systems, laser technology, MRI technologies, high-strength steel alloys, fiber-reinforced plastics, nanotechnologies. Tens of millions of new jobs -- well-paying jobs with good benefits -- were created through these innovative industries.

Each of them arose out of government-funded research, initial development by government, requirements established by regulation, large-scale governmental demand and purchasing to provide initial markets, or some combination of these. Every one of them.

That’s all fine and good, but what is clear is that none of these technologies were the result of the type of social spending Democrats tend to favor. Instead, they were all created through defense or defense-related investment. The internet grew from ARPANET, a defense department initiative. GPS research began in the 1960’s as an effort to guide submarine-based nuclear missiles. Run through the list - jet aviation, laser technology, high-strength steel alloys, fiber-reinforced plastics, etc. – and it is easy to see the interests of the military behind each one. In fact, one could argue that it is spending on defense systems that have been largely anathema to Democrats – stealth bombers and fighters, missile defense systems and the like that have brought us much of this new technology.

Mr. Schwartz’ argument presents a typical trap, thanks to faulty logic. In this case, he argues government spending brought us these technologies and since Democrats are in favor of greater government spending, a government run by Democrats is more likely to bring us new technologies and the jobs that result from those technologies. But it’s clear that it is a very specific type of spending that brings us those jobs. Government spending in and of itself guarantees us no such outcome. It’s a trap of which we should all be wary.

That said, there are investments that the Democrats are calling for, such as alternative energies, that could well provide spinoff benefits similar to those we’ve enjoyed from defense spending. In fact, the payoff could be of historic proportions in terms of economic, climatic and geo-political impact. We can argue the merits of greater government spending, be it for social programs, the military or alternative fuels. But we cannot argue for one based upon the merits of another, lest we find ourselves spending money in hopes of an outcome that will never come to pass.

Paul, I think it is crucially important to distinguish between spending for votes, and spending to solve national problems.

Our oil dependence on foreign exporters is a national problem, and investments in alternatives by the public tax dollar for the public independence from foreign oil, is a whole different animal than spending on a bridge to nowhere in Alaska to benefit some local contractors.

Don’t mix, or confuse the two. They are radically different concepts and with radically different outcomes. Spending to solve national problems secures America’s future and the next generation of Americans. Spending for votes just makes the whole nation go deeper into debt.

Democratic Congressmen like military spending as much as anyone, when it is in their districts and states, not so much when it is in a foreign country. Corporations, and their shareholders, have benefitted from government spending, but there haven’t always been any beneficial advancements. The aircraft industry comes to mind here. We’ve basically been unable to produce enough oil since jet fuel became so important.

ohrealy said: “Democratic Congressmen like military spending as much as anyone, when it is in their districts and states”

Ain’t that the truth? And they played no small part in the deficits and growth of the national debt under Republican rule. I am pretty sure both McCain and Obama are intent on remedying this abomination upon the next generation of taxpayers, to some extent.

With co-equal branches of government however, the best of fiscal intentions will still face bartering for legislation, and that translates to compromises and that means some buying of votes will always be evident in any budget.

But, that aside, we have to eliminate this 455 billion dollar deficit ASAP. Becoming the world’s largest debtor nation is not a position of strength, but, a position of weakness to be exploited by creditors. One only need to acknowledge the 32% interest rates on credit card borrowers here in the U.S. for a prime example of the power of creditors.

Zero based budgeting is one solution, but Big Daddy Byrd and the 99 junior senators in his flock won’t stand for it, or 438 of the lesser chickens. I don’t think it can be done within the current duopoly.

Posted by: ohrealy at August 30, 2008 12:34 AM

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